Ed Miliband is expected to propose a new tax on tobacco companies – possibly levied according to market share – in his Labour Party conference speech to help fund greater spending on the National Health Service. Fair enough, you might say. The tobacco companies cost the NHS, and therefore the public purse, an awful lot of money. Wrong.

I know this because I once heard it from the mouth of Professor Sir Richard Doll, no less, the man whose research originally proved the link between smoking and lung cancer. Many years ago, I happened to be at a lunch he was hosting for some particularly passionate representatives of ASH (Action on Smoking and Health). I was a smoker at the time, so kept pretty quiet, I can tell you, not for fear of upsetting them by defending the individual's right to smoke, but for worry that they might smell the nicotine… Read More

Out of the frying pan into the fire. Sterling rallied in relief overnight as it became progressively more obvious that the outcome of the Scottish referendum would be a reasonably decisive no. But hold on a moment; that doesn't mean no change. The old uncertainty has merely been replaced by a new kind of imponderable – what sort of union are we going to end up with?

In his post referendum statement, David Cameron, the prime minister, said that the West Lothian question – the anomoly under which Scottish MPs get to vote on matters affecting England even though English MPs have no say in matters devolved to Scotland – would have to be answered in view of the promise of more devolution for Scotland. He then went on to suggest that in future only English MPs would be allowed to vote on English laws. This in my view would be… Read More

There have been a lot of complaints from separatists about supposed pro-union bias in the BBC's – and specifically Nick Robinson's – reporting of the independence debate. Indeed there was a whole and somewhat disturbing rally devoted to it. I can't say I've noticed the phenomenon – beyond duty to report the no campaign thoroughly and faithfully – though I guess that if it exists at all, it's as much about self interest as anything else. The British Broadcasting Corporation is as frightened by the prospect of break-up as anyone, for its own separation would soon follow. Critical mass would be lost, and the BBC's monopolistic sway in cultural and political life would in some way be impaired.

There is, however, one bias I have noticed, which is the constant references to the independence campaign as being about the pursuit of a fairer and more just society. This tends to be… Read More

For nearly five million Scots, next week’s vote is a once in a lifetime opportunity to take charge of their country’s future. What they perhaps don’t appreciate, however, is the impact their decision might have on hundreds of millions of others.

History is littered with examples of comparatively small events lighting the fuse on much bigger ones, sometimes with catastrophic geo-political and economic consequences. We scarcely need reminding of this uncomfortable fact in this, the hundredth anniversary year of the outbreak of the first world war, when an assassination in Sarajevo provided the excuse for the worst and most destructive conflict the world had ever seen.

Apparently small events can also have more positive seismic outcomes of course – via perestroika and glasnost, a strike in Gdansk eventually culminated in the fall of the Berlin Wall and the geopolitical reconfiguration of much of eastern Europe. But it is the negative small event… Read More

One point which has been made to me quite a bit in writing about the pound and Scottish independence is that we shouldn't be looking so much at the eurozone as the model, which has plainly been a disaster, but at more successful examples of monetary union between sovereign nations, of which there are admittedly a few. But I mean a few. Probably the best recent example was Belgium and Luxembourg, which reigned from the 1920s to the 1990s. However, it is very hard to point to other durable monetary unions which haven't involved some degree of common government. The Austro-Hungarian currency union, which ruled until the end of the First World War admittedly did encompass a number of different fiscal authorities, but it also relied heavily on empire to sustain it, and it… Read More

Confusion surrounds what Alex Salmond, Scotland's first minister, actually said in response to questions about whether Scotland might refuse its share of the national debt in the event of a Yes vote. For the record, his spokesman denies that he replied "what are they going to do, invade?"

Whatever the truth, the implied threat of default is one that has been made before, and in any case, a bit like the Queen, Mr Salmond may generally use the language of diplomacy in public, but we all know what he thinks in private. It is, however, an entirely false threat.

That's not to say it won't be carried out if Holyrood doesn't get what it wants in negotiations over the terms of seperation, but if it is, it will harm Scotland a great deal more than the rest of the UK. The most important point to make about such an action i… Read More

As head of the independent Institute for Fiscal Studies, Robert Chote was a more or less perpetual thorn in the side of Gordon Brown's chancellorship, repeatedly criticising government policy for the black hole it was creating in the public finances. Now reincarnated as chairman of the Office for Budget Responsibility, he's plainly not mellowed, for he pulls none of his punches in an analysis just published with his OBR colleague, Jon Riley, of the collapse in Britain's fiscal situation – Crisis and consolidation in the public finances.

There are basically two takeaways from this document. The first is that the public finances were indeed being run irresponsibly for several years prior to the crisis (see chart below), and secondly that even when we do eventually return to budget surplus – in 2018/19 on the present timetable – with tax revenue and government spending roughly balanced at the 38 per cent… Read More

As a unionist at heart, I’m hoping that much of this column will be rendered irrelevant in a couple of week’s time by a decisive no vote on Scottish independence. None the less, the chances of Scots collectively throwing themselves over the cliff have risen strongly in recent days. Already, financial markets are preparing for the worst.

The short to medium term consequences of such an outcome are bound to be exceptionally ugly, upsetting the economic recovery and provoking a profound constitutional crisis.

Yet in every disaster there is opportunity, and looking through the immediate chaos of a yes vote, it is possible to be quite optimistic about long term prospects for the surviving rump, particularly, as seems likely, if it proves the catalyst for much needed economic and constitutional reform.

The opportunity to move towards a more federal form of governance, with powers widely devolved to the regions and major… Read More

Hans-Werner Sinn, president of Germany's Ifo Institute, makes an often forgotten – or deliberately ignored – point in a new book on the euro crisis* which is also highly pertinent to the current debate about what the European Central Bank should do next. Eurozone austerity, he argues, is not something that has been imposed by policymakers, but by the capital markets, which lost faith in southern Europe's ability to sustain its levels of public and private debt. Without cross border bailouts and the backstop of the European Central Bank, most of these countries would have gone bust, would not have been able to access capital markets at all, and as a consequence would have had to impose far more severe austerity on their citizens than the much milder dosage advised by the troika.

Is this really the end of the line for globalisation? Following my blog yesterday on Russia's return to the economic isolationism of the Soviet era, I've been thinking more widely about the slowdown in global trade, and whether this is a structural phenomenon that presages a seminal change in interactivity between nations, or just a temporary hiatus brought on by the financial crisis.

click to elarge

I'm hoping it's the latter. Regrettably, this may be just wishful thinking, for there are plenty of reasons for thinking otherwise. Historically, trade has averaged around 1.4 times the rate of growth in GDP. This relationship collapsed in the immediate aftermath of the Lehman's crisis and though trade soon came bouncing back, the past trend of superior growth has failed to reestablish itself. Nominal GDP was around 10… Read More